Savvy small business owners know well the significance of inventory management. And while there are many perks to this approach, there’s only one rule of thumb; never rely entirely on computerized maintenance management systems (CMMS) or any other inventory monitoring software (that you run on your own) for your machinery or the equipment under your command or risk doing yourself and your business a serious harm.
To shed even more light on the matter, this blog post discusses the many things a great IMS can do for your company. Proper Inventory management leads to business success.
Here are the many things good inventory management can help you with:
1-Ensures Inventory Balance
Proper inventory management can help you work out how much inventory your business needs. That way, you get the upper hand— and the ability to avoid product shortages, while keeping around just enough inventory for your needs (and not too much). Plus, inventory monitoring ensures you know where your important equipment and machine parts are stored which is essential in helping you get back up and running as soon as possible in case of equipment failure.
2-Leads to Repeat Customers
Proactive inventory management leads to every retailer’s desire – repeat buying. Don’t you want that list of hard-earned clients to turn into regular shoppers and make your store their first stop any time they are in need? One easy way to convert prospects into frequent customers and retain them is to make sure you always have the items they’re searching for every time they visit.
3-Allows you plan as per your demand curve
Keeping track of your inventory makes sure you are flexible enough to bend with the demand curve—which means you can set up equipment to increase production during high seasons and use only what you need when sales are low. This is important in making sure you don’t miss out on profits and also get to meet customers’ demands.
4-Promotes appropriate staffing
Analyzing your business’s order histories and maintenance schedules allows you to make accurate predictions about the number of staff and working-hours you can expect during different times of the year. That way, you can schedule your team appropriately instead of having extra workers that you don’t need around. Or in some cases, you may experience a shortage in staffing when sales go up without you anticipation.
5-Tracks Inventory Turnover
Your inventory turnover ratio should stay high to ensure your products do not spoil, get obsolete or eat up your working capital. Work out the number of times (in a year) your inventory sells and spot areas where you can improve resource utilization. It helps to keep track of your inventory turnover to find out whether you are spending more on machines for fewer returns or the vice versa. By comparing margin vs. markup, you can tell whether your firm is headed in the correct direction.
6-Helps you organize your Warehouse
If you’ve studied and discovered the products that are your top sellers and the combinations of items your customers love to order, you can organize your warehouse by keeping those items close together and in a place where they are easily accessible thus speeding up the collection, packing and shipping tasks. Warehouse organization is one way to stay ahead of your competitors, and good inventory management is one method to achieve the former.
7-Increases Staff Efficiency
Motivate and empower your staff to help with inventory monitoring and management. Training workers to use inventory management software, barcode scanners, as well as other tools is an excellent way to help them make good use of their time and improves resource utilization in your business premises, both technological and human.
8-Avoid Lawsuits and Regulatory Fines
A disorganized warehouse can land you in problems with the authorities as it may cause safety hazards, which, can end up in lawsuits, injury, and fines linked to breaching regulatory laws. Plus, managing your inventory correctly (which entails keeping records of all activities) helps you document all your actions in case of any of the above situations.
9-Fosters Planned Inventory Orders
If you keep good track of how much inventory your business has on hand, you can make wiser decisions about what and when to place orders. Inventory management software enables you to accelerate the ordering process which gets you ready for increased demands.
10-Inventory tracking for multiple locations
For businesses with various sites, inventory management is critical because owners need to organize supplies at each branch depending on market and many other factors. Dealing with several areas can be confusing without proper monitoring.
11-You save on Time
Inventory management saves you a lot of time. Monitoring all the items you have (on hand and on order) saves you the hassle of conducting inventory recounts to confirm whether you have accurate records. You can store these kinds of data with the help of inventory management software.
12-You cut on Costs
Ensuring your inventory is in harmony with your facilities makes sure cut on many unnecessary costs and save a lot of money. Inventory management is the only way you can spot slow-moving money-wasting products, so you decide on a way forward for the benefit of your company. You also cut on expenses involved with the lawsuits you may suffer due to poor management, and reduce spending on payroll and machine hires during low seasons.
13-Access to Real-Time Data
The manual system provides accurate and up to date data as per the last count. But a centralized inventory management system can help the team pull a report immediately and review the number of units on the floor, the sold-out number and the fastest selling products.
A proactive IMS is a critical tool that touches almost all aspects of business success. With an inventory management system in place, your managers and staff work smoothly through their production, warehousing and order processes while avoiding mistakes that could cost your company a fortune and its reputable name.